Five years later, where are we today?

This month many in Washington are taking stock of where we are five years after the worst financial crash since the Great Depression. Speeches have been made. Statements have been released. While it appears our political leadership is at odds, by cutting through the political rhetoric you will see that one theme remains true – we are all working toward policies to ensure the mistakes of the past never happen again.

Real estate finance is critical to our economy, but also to the everyday lives of the people it serves. Over the past few months, I’ve highlighted many of the critical issues and addressed the real estate finance reform debate that has begun in Washington and will continue for the next several years. You’ve also read about the variety of proposals on how to get new lending regulations right for the protection of consumers and to ensure the lending industry can function soundly. Through a collaborative process with regulators, consumer advocates and industry experts, I’m pleased that progress has been made on several fronts so that consumers are protected, but not kept from their dream of homeownership.

You’ve also had an opportunity to read about the industry’s proposals on reforming the government sponsored entities (GSEs) of Fannie Mae and Freddie Mac. Five years after being placed in conservatorship, Fannie Mae and Freddie Mac continue to play a central role in the U.S. mortgage market. Conservatorship is by definition a temporary environment and there has been a recent increase in activity in Washington to suggest there may be movement toward establishing a sustainable secondary mortgage market.

The real estate finance industry has been engaged with all players in this debate; providing technical support to inform policymakers’ rationale and advocating for certain critical features that will be necessary to any secondary marketplace of the future. However, the industry has also been very clear and consistently reminded all participants in the debate that any transition to a new system must retain and redeploy key aspects of the GSEs existing infrastructures including certain operational functions, systems, and business processes. Common sense dictates that the key “plumbing” and connectivity between the GSEs and lenders must remain.

For many in the industry as well as consumers on the outside looking in, these reform conversations can be maddeningly abstract at times, and positively infuriating at others. Many have asked the question, “why now” especially as recovery is slowly, but surely taking hold. The fact is that there is little appetite in Congress or in the Administration for keeping the GSEs in their current form.T o keep the recovery going there is a need for private capital to return even stronger to the marketplace and be in the first-loss position, but backed by an explicit federal backstop.

A thoughtful transition plan must leverage existing assets in a new system that promotes access to multiple entities, ensures old behaviors never return, creates a level playing field for lenders of all sizes, requires adequate capital, and provides taxpayer protection.This is complicated stuff, but essential to the health and sustainability of any future real estate finance system.It’s an enormous job that will take time and collaboration to work through all the details.

However tough and complicated this may seem, it is achievable and we will continue to work toward the housing market of the future that provides the appropriate balance of consumer protection, accessibility and profitability to support a growing economy.

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